LATVIAN CENTRAL DEPOSITORY Settlement procedure for financial instruments registered with Clearstream Banking Luxembourg

Transcription

1 APPROVED by Latvian Central Depository Management Board Meeting on May 16, 2011 amendments approved on August 29, 2016 LATVIAN CENTRAL DEPOSITORY Settlement procedure for financial instruments registered with Clearstream Banking Luxembourg 1. Terminology The terminology used in the Settlement procedure for financial instruments registered with Clearstream Banking Luxembourg (hereinafter - Procedure) is the same as in the Financial Instrument Market Law and other Latvian Central Depository (hereinafter LCD) Rules. The abbreviations used in the present Procedure are used only for the purpose of this Procedure. 2. General provisions 2.1. The Procedure has been developed to establish the operations to be performed by LCD and LCD participants when, as a result of a transfer of financial instruments registered with Clearstream Banking Luxembourg (hereinafter CBL) (i.e. financial instruments that can be settled within CBL) said instruments are credited to LCD nominee account with CBL and have to be registered with LCD financial instruments accounting system, or, alternatively, have to be transferred from it when, as a result of the transfer, the financial instruments are debited to LCD nominee account with CBL Following the routines described by the Procedure, LCD and LCD participants shall be guided by the provisions of the following LCD Rules: No. 2 On book-entry of financial instruments issue, No. 3 On accounting of financial instruments and execution of corporate events, No. 4 On financial instrument transfers, No.15 On DVP settlement in foreign currencies and No. 11 On data exchange, unless the present document does not provide for other rules for specific actions LCD has registered CBL as a LCD participant in special status and has assigned a LCD participant code According to the FATCA *, CBL has registered LCD as non-qualified intermediary and for execution of corporate actions for those financial instruments held in LCD nominee accounts with CBL, CBL in respect of LCD is acting as the tax withholding agent. Based on the aforementioned, LCD participants shall disclose to LCD all information that LCD is obliged to submit to CBL for execution of financial instruments corporate actions. 1

2 (* FATCA - Foreign Account Tax Compliance Act,the provisions of which is included USA HIRE law from 2010) 2.4. CBL has opened in its accounting and settlement system for LCD, as a non-qualified intermediary, the following accounts: LCD nominee financial account for accounting financial instruments that primarily have been registered with CBL and are owned by LCD participants. The information about the financial instruments account number mentioned in this sections the LCD participant can obtain by sending to the LCD s official a written request. LCD response to this request without delay, but no later than in one (1) business day; LCD nominee financial account for accounting financial instruments that primarily have been registered with CBL and are owned by client/s of LCD participant. If according to the CBL rules for holding of specific financial instruments, or for particular LCD participant s clients, CBL is obliged to open a separate financial instruments account, the LCD shall notify the LCD participant about that. LCD participant is obliged to submit to LCD all the information necessary for opening the separate account with CBL within five (5) business days from reception of the LCD notice. When the financial account referred in this subsection is opened the LCD electronically transmit account details to the LCD participant; For each LCD nominee account opened with CBL a cash account has been linked to enable cash settlement All financial instruments that are issued in the CBL defined core markets** and that settles in CBL accounting and settlement system are eligible for entering on the LCD nominee financial instrument account within CBL accounting and settlement system, except for the instruments that primarily haven been registered with LCD. If LCD participant in its own name or on behalf of its client in the LCD nominee account opened within CBL wants to hold financial instruments issued in the CBL defined specific markets***, the LCD participant shall notify LCD about that, by sending to the LCD official notice setting out what financial instruments LCD participant intends to transfer, at least three (3) business days before LCD nominee financial instrument account within CBL is credited. LCD electronically notifies LCD participant about permission or prohibition to transfer to the LCD nominee financial instrument account within CBL financial instruments specified in LCD participants notification within three 3 (three) days from LCD participants notification. (At the moment of approval of those amendment the CBL defined marekts are: **Core markets financial instruments recorded in international securities depositories (ISIN XS ), finanial instruments issued in Italy, Austria, Netherland, France, Great Britain, Germany and USAi. ***Specific markets all other financial instruments that are not issued in core markets.) 2.6. LCD has opened in its accounting and settlement system an account (account No according to LCD Rule No.11 On data exchange ), corresponding with the LCD nominee financial instrument accounts in CBL accounting and settlement system. 2

3 2.7. Data exchange between LCD and CBL is performed via SWIFT (Society of Worldwide Interbank Financial Telecommunication) terminal or by using CreationOnline solution provided by CBL LCD, on behalf of its participants, provides free of payment (hereinafter FOP) and delivery versus payment (hereinafter DVP) gross settlement for the financial instruments registered with CBL The transfers between LCD and CBL referred to Item 2.8 of the Procedure may be executed between 09:00 and 19:00 (Latvia time) on all days that simultaneously are business days for LCD and CBL, however, taking into account that on some occasions the transaction may be entered in the books on a date that is a business day for CBL but not for LCD In an FOP transaction or DVP settlement order, the intended settlement date may be specified as a date preceding the submission of the transfer order to LCD (past date), as a date following the submission of the transfer order to LCD (future date) or the same as the date when the transfer order is submitted (present date) Where, by 19:00 on the settlement day (hereinafter S day) LCD has failed to receive from CBL a confirmation for executing a FOP or DVP settlement, the instruction of the LCD participant is rolled over to the next settlement date and further on until LCD has received a confirmation from CBL or until the FOP or DVP settlement instruction is cancelled Where the date for book entry specified in the CBL confirmation is not a business day for LCD, the LCD participant shall receive a confirmation from LCD about the settlement on the first business day following the date specified by CBL in the confirmation CBL may reject a FOP or DVP instruction with incorrect counterpart information. When receiving a CBL rejection to execute a FOP or DVP instruction, LCD shall cancel the LCD participant s FOP or DVP settlement instruction and send a message the LCD participant accordingly FOP or DVP settlement instructions are cancelled according to the CBL Rules available on CBL website To cancel a FOP or DVP settlement instruction that has been submitted to LCD, a LCD participant shall send LCD a cancellation message. Upon receiving a cancellation message from a LCD participant, LCD shall do the following: If the instruction submitted by the LCD participant to LCD has not yet been forwarded to CBL, LCD shall cancel it and send a message to the LCD participant accordingly; If the instruction submitted by LCD participant to LCD has already been forwarded to CBL, LCD shall send a cancellation message to CBL provided that settlement of the instruction has not yet been initiated in CBL accounting and settlement system; 3

4 Upon receiving a confirmation from CBL about the cancellation, LCD shall cancel the instruction submitted by the LCD participant and send a message to the LCD participant accordingly When preparing transfer messages for financial instruments entered on CBL accounting and settlement system, LCD participants have to follow specific instructions set out in Section 5 of the Procedure. 3. FOP transfers 3.1. The procedure for FOP transfer from LCD to CBL accounting and settlement system: LCD participant who is the delivering party of financial instruments submits to LCD a FOP instruction; The FOP instruction shall reach LCD by 13:00 on S day the latest; LCD, upon a receiving a FOP instruction from the LCD participant, checks on the correctness of the instruction as to the technical aspect and on the sufficiency of financial instruments on the LCD participant s account in order to be able execute the instruction Depending on the findings, LCD shall do one of the following: If all criteria listed under Item of the Procedure are met, LCD shall, without delay, block the financial instruments on the LCD participant s corresponding account that have been specified in the instruction, and shall send CBL a FOP transfer instruction; If the number of financial instruments on the LCD participant s account is not sufficient, LCD shall suspend the transfer until the necessary number of financial instruments is provided. In case of failure to provide the necessary number of financial instruments by 13:00 on S day, the instruction is cancelled and LCD shall send a message to the LCD participant accordingly; If the instruction is incorrect from the technical aspect, LCD shall reject the instruction and advise the LCD participant thereof Where, by 19:00 on S day LCD has received from CBL a confirmation for executing a FOP transfer, LCD shall execute the transfer by debiting the LCD participant s financial instrument account and shall send a message to the LCD participant accordingly Where, by 19:00 on S day LCD has failed to receive from CBL a confirmation for executing a FOP transfer, LCD shall act according to Items 2.10 and 2.11 of the Procedure Where LCD has received from CBL a rejection to execute a FOP transfer, LCD shall unblock the financial instruments blocked for the purpose of executing the instruction and shall send a message to the LCD participant accordingly The procedure for executing a FOP transfer from CBL to LCD accounting system The LCD participant who is the receiving party of financial instruments shall send LCD a Receive confirmation no later than by 13:00 on S day. 4

5 LCD, upon receiving a Receive confirmation from the LCD participant, shall check on the correctness as to the technical aspect. Depending on the findings, LCD shall do one of the following: If the confirmation is correct from the technical aspect, LCD shall, without delay, send a message to CBL accordingly; If the confirmation is incorrect from the technical aspect, LCD shall reject it and advise the LCD participant thereof Where, by 19:00 on S day LCD has received a confirmation from CBL to make a FOP transfer, LCD shall execute the FOP transfer by crediting the LCD participant s account. LCD shall send a message to the LCD participant accordingly about the executed instruction Where, by 19:00 on S day LCD has failed to receive from CBL a confirmation to make a FOP transfer, LCD shall act according to Items 2.10 and 2.11 of the Procedure Where LCD has received from CBL a rejection to execute a FOP transfer, LCD shall cancel the instruction and send a message to the LCD participant accordingly. 4. DVP settlement 4.1. For DVP settlement of financial instruments that are registered with CBL LCD shall use these LCD participants cash accounts that they have specified to LCD according to the provisions of Item 2.3 of LCD Rules No. 15 On DVP settlement in foreign currencies To execute a DVP settlement with financial instruments registered with CBL, irrespective of the type of transaction (a stock exchange trade or OTC trade) LCD participant shall fill out and submit to LCD a DVP sell or buy instruction according to the message templates provided in Chapter 5 of the Procedure By 13:00 on S day, LCD participant shall transfer the cash amount necessary for the execution of DVP settlement to the LCD cash account opened with CBL accounting and settlement system Execution of DVP settlement for the buy side LCD participant who is the receiving party of financial instruments (buyer) shall send LCD the DVP buy instruction no later than 13:00 on S day LCD, upon receiving a DVP buy instruction, shall check as to the correctness from the technical aspect, and whether the LCD participant has transferred the cash amount necessary for the execution of the DVP settlement for the buy side to the LCD cash account opened with CBP accounting and settlement system Depending on the findings, LCD shall do one of the following: Where all the provisions of Item of the Procedure have been met, LCD shall, without delay, forward the DVP buy instruction to CBL; Where the LCD participant has failed to transfer the necessary amount to the specified LCD cash account, LCD shall suspend the DVP settlement for the buyer until the necessary cash amount is provided. In case the necessary cash amount has not been transferred to the specified LCD cash account by 13:00 on S day, the 5

6 instruction shall be cancelled, and LCD shall send a message to the LCD participant accordingly; Where the instruction has been filled out incorrectly from the technical aspect, LCD shall reject the DVP buy instruction and advise the LCD participant thereof Where, by 19:00 on S day LCD has received from CBL a confirmation of DVP for the buyer, LCD shall transfer the financial instruments to the LCD participant s account and CBL shall settle cash in its accounting and settlement system. LCD shall send a message to the LCD participant accordingly about the executed settlement Where the provisions of Item of the Procedure have been met, but LCD has not received from CBL a confirmation for DVP settlement for the buyer, LCD shall act as set forth in Items 2.10 and 2.11 of the Procedure Where LCD has received from CBL a rejection for a DVP settlement for the buyer, LCD shall cancel the instruction and send a message to the LCD participant accordingly Execution of DVP settlement for the sell side LCD participant who is the delivering party of financial instruments (seller) shall send LCD a DVP sell instruction no later than 13:00 on S day LCD, upon receiving a DVP sell instruction, shall check as to the correctness from the technical aspect, and whether the LCD participant has sufficient number of financial instruments on the account to be able to execute DVP settlement for the seller Depending on the findings, LCD shall do one of the following: Where all the provisions of Item of the Procedure have been met, LCD shall, without delay, block the financial instruments on the LCD participant s corresponding account for which the DVP settlement instruction for the seller has been submitted, and forward the DVP settlement instruction for the seller to CBL; Where the number of financial instruments in the LCD participant s account is not sufficient, LCD shall suspend the execution DVP settlement for the seller until the necessary number of financial instruments is provided. Where the necessary number of financial instruments has not been provided by 13:00 on S day, the instruction shall be cancelled and LCD shall send a message to the LCD participant accordingly Where the instruction has been filled out incorrectly from the technical aspect, LCD shall reject the instruction and advise the LCD participant thereof Where, by 19:00 on S day, LCD has received from CBL a confirmation of DVP settlement for the seller, LCD shall execute the settlement by debiting the LCD participant s corresponding account, and, without delay, shall instruct CBL to transfer the cash necessary for the DVP settlement to the LCD participant s cash account. LCD shall send a message to the LCD participant accordingly about the executed settlement Where the provisions of Item of the Procedure have been met, but LCD has not received from CBL a confirmation for DVP settlement for the seller, LCD shall act as set forth in Items 2.10 and 2.11 of the Procedure. 6

7 Where LCD has received from CBL a rejection for a DVP settlement for the seller, LCD shall unblock the financial instruments blocked for the execution of the instruction and send a message to the LCD participant accordingly. 5. Specific instructions for filling out message templates 5.1. For a FOP transfer or a DVP settlement for a buyer, where financial instruments from the CBL books are transferred to the LCD nominee account with CBL (the recipient of financial instruments is a LCD participant), LCD participant shall fill out the message templates according to the provisions of LCD Rules No.11 On data exchange, following the specific requirements set out in this Item: In case of FOP transfer, a LCD participant shall fill out the template for Message 52 (fields to be filled out otherwise than specified in LCD Rules No.11 are singled out in red): Message 52 Field name Field contents Filling requirements Filling instructions MSGREF Message number Unique number assigned by the LCD participant MSGREFREL Number of associated message NO MSTYPE Message type 052 OPERTYPE Type of transaction Type of transaction SENDER Message sender LCD participant s code RECEIVER Message recipient LCD code KONTSDB LCD account in debit Counterpart account with KONTSCR LCD account in credit LCD (Recipient of financial instruments) CLIENTDBKONTS Client s account in debit BIC/account 1 CLIENTCRKONTS Client s account in credit recipient s client s account CLIENTDBNAME Client s name in debit CLIENTCRNAME Client s name in credit BROKSELL Broker for selling NO BROKBUY Broker for buying NO CONFIRMSELL Cofirmation for selling NO CONFIRMBUY Confirmation for buying NO SETTLEMENTMODE Settlement mode NO deliverer s client s name recipient s client s name 7

8 BSESNUM Session number NO DATT Transaction date DATS Settlement date VALUTA Currency NO SUMMA Amount NO Transaction execution date should be specified Settlement date should be specified. May not be a nonbusiness day. VPKODS ISIN code code VPSKAITS Number of financial number instruments (units) MSGCOMMENT Comments Optional Comments 1 BIC stands for BIC code of a foreign depository that is the depository of the deliverer of financial instruments or the settlement place; account is the account number of the deliverer of financial instruments within its foreign depository system wherefrom or via which the financial instruments will be delivered. Example A: s are delivered from an account opened within CBL accounting and settlement system; CLIENTDBKONTS should be filled out: CEDELULLXXX/11111 Example B: s are delivered from an account opened within Euroclear accounting and settlement system; CLIENTDBKONTS should be filled out: MGTCBEBEXXX/ In case of DVP settlement for a buyer, a LCD participant shall fill out the template for Message 6042 (fields to be filled out otherwise than specified in LCD Rules No.11 are singled out in red): Message 6042 Field name Field contents Filling requirements MSGREF Message number Filling instructions Sender specifies the unique number assigned by the LCD participant Sender specifies the unique number of the transaction MSGREFREL Number of associated message MSTYPE Message type 6042 OPERTYPE Type of transaction Transaction type code SENDER Message sender Sender s LCD code RECEIVER Message recipient 0001 (LCD code -) KONTSDB LCD account in debit

9 KONTSCR LCD account in credit CLIENTDBKONTS Client s account in debit CLIENTCRKONTS CLIENTDBNAME Client s account in credit Client s name in debit CLIENTCRNAME Client s name in credit BROKSELL Broker for selling NO BROKBUY Broker for buying, where SENDER Is not identical to KONTSCR Participant CONFIRMSELL Cofirmation for selling NO CONFIRMBUY Confirmation for buying Optional SETTLEMENTMODE Settlement mode NO BSESNUM Session number NO DATT Transaction date DATS Settlement date VALUTA Currency Counterpart account with LCD (Recipient of financial instruments) BIC/account1 recipient s client s account 2 deliverer s client s name recipient s client s name Broker s ( representing buyer) LCDcode. Should be identical with field SENDER. 1 when required; 0 when not required. Where the message sender is not authorized to instruct LCD to creditthe account specified by KONTSCR, LCD assumes the value of the field to be 1. Transaction execution date should be specified. May not be a non-business day. Settlement date should be specified. May not be a nonbusiness day. SUMMA Amount VPKODS code ISIN code VPSKAITS Number of financial number instruments (units) MSGCOMMENT Comments CBL corresponding account details 1 BIC stands for BIC code of a foreign depository that is the depository of the deliverer of financial instruments or the settlement place; account is the account number of the deliverer of financial instruments within its foreign depository system wherefrom or via which the financial instruments will be delivered. 9

10 Example A: s are delivered from an account opened within CBL accounting and settlement system; CLIENTDBKONTS should be filled out: CEDELULLXXX/11111 Example B: s are delivered from an account opened within Euroclear accounting and settlement system; CLIENTDBKONTS should be filled out: MGTCBEBEXXX/ Filling out the field: BIC/Klienta konts 3 Filling out the field: BIC/konta numurs - BIC code of CBL corresponding bank (11 symbols) and cash account mumber whereto LCD participant has transferred the money amount necessary for DVP settlement. BIC code and cash account number should be separated with / For a FOP transfer or a DVP settlement for a seller, where financial instruments from the CBL books are transferred to the LCD nominee account with CBL (the recipient of financial instruments is a LCD participant), LCD participant shall fill out the message templates according to the provisions of LCD Rules No.11 On data exchange, following the specific requirements set out in this Item: In case of FPO transfer, a LCD participant shall fill out the template for Message 50 (fields to be filled out otherwise than specified in LCD Rules No.11 are singled out in red): Message 50 Field name Field contents Filling requirements Filling instructions MSGREF Message number Unique number assigned by the LCD participant MSGREFREL Number of associated message NO MSTYPE Message type 050 OPERTYPE Type of transaction Type of transaction SENDER Message sender LCD participant s code RECEIVER Message recipient LCD code KONTSDB LCD account in debit Counterpart account with LCD (Recipient of financial instruments) KONTSCR LCD account in credit CLIENTDBKONTS Client s account in debit recipient s client s account 10

11 CLIENTCRKONTS Client s account in credit CLIENTDBNAME Client s name in debit CLIENTCRNAME Client s name in credit BROKSELL Broker for selling NO BROKBUY Broker for buying NO CONFIRMSELL Cofirmation for selling NO CONFIRMBUY Confirmation for buying NO SETTLEMENTMODE Settlement mode NO BSESNUM Session number NO DATT Transaction date DATS Settlement date VALUTA Currency NO SUMMA Amount NO BIC/account 1 deliverer s client s name recipient s client s name Transaction execution date should be specified Settlement date should be specified. May not be a nonbusiness day. VPKODS ISIN code code VPSKAITS Number of financial number instruments (units) MSGCOMMENT Comments Optional Comments 1 BIC stands for BIC code of a foreign depository that is the depository of the recipient of financial instruments or the settlement place; account is the account number of the recipient of financial instruments, whereto the financial instruments will be transferred. Example A: s are transferred to an account opened within CBL accounting and settlement system; CLIENTCRKONTS should be filled out: CEDELULLXXX/11111 Example B: s are transferred to an account opened within Euroclear accounting and settlement system, CLIENTCRKONTS should be filled out: MGTCBEBEXXX/ In case of DVP settlement for a seller, a LCD participant shall fill out the template for Message 6041 (fields to be filled out otherwise than specified in LCD Rules No.11 are singled out in red) Message

12 Field name Field contents Filling requirements MSGREF Message number Filling instructions Sender specifies the unique number assigned by the LCD participant MSGREFREL Number of associated message Sender specifies the unique number of the transaction MSTYPE Message type 6041 OPERTYPE Type of transaction Transaction type code SENDER Message sender Sender s LCD code RECEIVER Message recipient 0001 (LCD code -) KONTSDB LCD account in debit Counterpart account with LCD (deliverer of financial instruments) KONTSCR LCD account in credit CLIENTDBKONTS Client s account in debit Deliverer s client s account 1 CLIENTCRKONTS Client s account in BIC/account2 CLIENTDBNAME Client s name in debit CLIENTCRNAME Client s name in credit BROKSELL Broker for selling NO BROKBUY Broker for buying, where SENDER Is not identical to KONTSCR participant CONFIRMSELL Cofirmation for selling Optional CONFIRMBUY Confirmation for buying NO deliverer s client s name recipient s client s name Broker s (representing buyer) LCD code. Should be identical with field SENDER. 1 when required; 0 when not required. Where the message sender is not authorized to instruct LCD to creditthe account specified by KONTSCR, LCD assumes the value of the field to be 1. 12

13 SETTLEMENTMODE Settlement mode NO BSESNUM Session number NO DATT Transaction date Transaction execution date should be specified. DATS Settlement date Settlement date should be specified. May not be a nonbusiness day. VALUTA Currency Settlement currency SUMMA Amount Money amount necessary for setlement VPKODS code ISIN code VPSKAITS Number of financial number instruments (units) MSGCOMMENT Comments Optional Comments 1 Filling out the field: BIC/Klienta konts 2 BIC stands for BIC code of a foreign depository that is the depository of the recipient of financial instruments or the settlement place; account is the account number of the recipient of financial instruments, whereto the financial instruments will be transferred. Example A: s are transferred to an account opened within CBL accounting and settlement system; CLIENTCRKONTS should be filled out: CEDELULLXXX/11111 Example B: s are transferred to an account opened within Euroclear accounting and settlement system; CLIENTCRKONTS should be filled out: MGTCBEBEXXX/